Constellation Brands tops earnings estimates on strong beer sales in fiscal Q1

Constellation Brands Inc (NYSE: STZ) is gaining in premarket on Wednesday after reporting better-than-expected earnings for its first quarter. 

Shares of the beverage giant are up more than 2.0% also because its management issued upbeat guidance for the full year. 

At the time of writing, STZ is trading at about $264 - down 4.0% versus its year-to-date high in late March. 

Constellation Brands' guidance for the full year

Constellation Brands expects its per-share earnings to fall between $13.50 and $13.80 in fiscal 2024. 

Analysts, in comparison, were at $13.65. Bill Newlands - chief executive of the New York listed firm said in a press release today:

STZ forecasts up to $1.5 billion in free cash flow this year. Constellation Brands stock is in the green also because its board authorised $1.01 a share of quarterly cash dividend on Wednesday.

Constellation Brands' Q1 earnings snapshot

• Earned $877 million versus the year ago $136 million
• Per-share earnings also increased from 74 cents to $4.87
• Adjusted EPS printed at $3.57 as per the earnings report
• Sales went up 6.0% year-over-year to $26.62 billion
• Consensus was $3.46 a share on $26.67 billion in sales

Constellation Brands has returned $240 million to shareholders via stock buybacks through June 2024. CEO Newlands also said on Wednesday:

What else was noteworthy in STZ Q1 report?

Constellation Brands attributed much of the strength in its recently concluded quarter to the beer business that brought in $22.73 billion - up 8.0% on a year-over-year basis.

Operating margin in that business also improved 260 basis points to 40.6% in fiscal Q1. According to Garth Hankinson - the chief financial officer of STZ:

Wall Street currently has a consensus "buy" rating on Constellation Brands stock. Analysts see upside in it to $300 on average that suggests potential for another 14% upside from here.